Cryptocurrencies Are Changing the Traditional Ways of Investment.

Is It Wise for Retirees/Seniors On Limited Income To Invest In Cryptocurrency?

The year 2020 saw the rise of cryptocurrency market capitalization. It jumped up 300%¹ from the previous year, evoking queries about whether retirees and senior citizens should take hold of the trend and invest in cryptocurrency.

In 2021, the Bitcoin market capitalization jumped up a massive 800%². This year is perfect for investing in cryptocurrency as financial institutions have begun to accept them. Large organizations like Elon Musk’s Tesla are investing in cryptocurrencies. Individuals interested in investing and growing their income, including retirees, especially those on a limited income, should start exploring the possibilities of investing in cryptocurrencies.

Essential Facts About Cryptocurrency

Before talking about cryptocurrency investments, here are some facts that will put things in perspective. Retirees and seniors, or even someone who is looking forward to retiring soon, must consider these fundamental facts as a foundation to think further about the pros and cons of investing in cryptocurrency.

• Cryptocurrency is a digital, encrypted, and decentralized form of money.
• Cryptocurrencies are not under the regulation or control of any central governing authority.
• Bitcoin was the first cryptocurrency to go public in 2009.³
• There are more than 4,500 cryptocurrencies at the time of writing this article.
• Organizations like BMW⁴, AT&T⁵, and Microsoft⁶ accept payments in Bitcoin.  

Why Should You Invest in Cryptocurrency?

A fundamental awareness of the advantages and disadvantages of investing in cryptocurrency will give deeper insight to retirees and seniors who want to invest in it. Here are the benefits.

• High Returns

Even though cryptocurrencies were slow to break through, Bitcoin rose by 9,000,000% ⁷ in a decade, leaving experts and financial gurus perplexed.

The high returns, commensurate with a higher risk than conventional investments, is a great reason to invest in cryptocurrencies. 

• Decentralized System

In banking, bodies and laws regulate all financial transactions made in the system. They also hold the power to change policies and lock funds as they feel necessary to do so.

Cryptocurrencies are different from traditional banking as they are decentralized. The regulators are not involved in the user’s financial transactions, and hence, the buyer becomes the exclusive owner of the cryptocurrency.

• Cost-Effective Transactions

Another problem with the traditional banking system is that there are transactional charges involved. Such transactional costs on the internet increase with the involvement of third-party platforms in a transaction. On the other hand, the transactional charges involved in cryptocurrencies are not high as those with financial institutions. Even when it comes to sending money across the border, cryptocurrencies are highly cost-effective.

Why Should You Not Invest in Cryptocurrency?

Here are some reasons that could be detrimental for cryptocurrency investment in certain cases, especially if the user is negligent. Retirees and seniors must keep the following aspects in mind before taking the plunge into the world of cryptocurrency investment.

• Highly Volatile

It is no hidden fact that cryptocurrencies are highly volatile, and it has its reasons. Cryptocurrency is not yet thoroughly developed and is still an emerging market in front of the world of fiat currencies and gold. Cryptocurrency market capitalization is $1.8 trillion⁸, and that of gold is around $10.962 trillion⁹.

• Technology

A majority of cryptocurrencies are purely digital. Physical assets such as gold or any other currency do not back them. Blockchain, the technology that drives cryptocurrency, is still developing as it has only been a decade since its advent. Suppose a technological hurdle is not solved within a reasonable timeframe. In such a case, the scalability problem can cause cryptocurrency prices to go down.

Final Words

The various factors discussed above contribute to the volatility and stability of cryptocurrencies in the market. The growing investments and increasing market capitalization will stabilize cryptocurrencies. The acceptance of cryptocurrency is also something that makes it a great investment tool for everyone, including retirees and senior citizens.

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